Legal & General could invest with foreign partners in British infrastructure-CEO

LONDON, Jan 14 (Reuters) - Legal & General (L&G) is
keen to invest in British property and infrastructure together
with overseas sovereign wealth funds such as the Abu Dhabi
Investment Authority (ADIA), the UK insurer's chief executive
said on Wednesday.

L&G's $1.1 trillion in assets under management and
investment in housing and transport schemes mean it wants to be
seen as a sovereign wealth fund for Britain, CEO Nigel Wilson
told Reuters in an interview.

ADIA, one of the world's largest sovereign wealth funds,
manages the surpluses of Abu Dhabi's earnings from oil exports.
It doesn't disclose the value of its assets under management but
is estimated to hold nearly $800 billion by the Sovereign
Wealth Fund Institute.

L&G has already invested 4.6 billion pounds ($7 billion) of
a 15 billion pound programme in projects including housing,
student accommodation and the rebuilding of a hospital in the
north of England. Wilson said cities outside London needed much
more investment.

"Great cities of the world are the economic drivers and
we've only got one in the UK."

Asked whether L&G faced competition from funds like ADIA -
which has a 15 percent stake in Gatwick Airport and a 10 percent
stake in Thames Water, Wilson said:

"Who do ADIA co-invest in business parks with in the UK -
that would be us. These huge guys want to co-invest. We already
manage a lot of money for these people, we are natural partners
for them, which goes back to...being the UK's sovereign wealth
fund."

L&G's long-term liabilities from its savings and pension
schemes, mainly in Britain, made long-term investment in the
country a natural match, Wilson said.

L&G is a leading player in the bulk annuity market - taking
on the risk of companies' defined benefit pension schemes - as
government reforms cut into the sales of individual annuities.

Those changes mean insurers are being forced to look at
other ways to boost their business, one of the key factors
behind rival Aviva's planned $9 billion acquisition of
Friends Life.

Wilson said the trend for insurers to take on pension scheme
risk would continue, providing a buffer for the lost revenue
from individual annuities.

"Have you ever met a pension CFO who says 'boy I'd like more
pension risk'? The world wants to derisk its pension funds and
wants to transfer that risk."

RBC raised L&G to "outperform" from "underperform" on
Wednesday, saying it expected the firm to show strong growth in
bulk annuities, which RBC said were "the most profitable product
in UK insurance".

Investors, meanwhile, have shown increasing interest in
longer-term and more illiquid forms of financing, as they tend
to offer a higher yield.

Among investment possibilities are high-density housing for
older people, who preferred to live in towns, Wilson said.

But planning laws make it harder to progress quickly, with
approval for one housing scheme in the south of England only
coming through after 17 years, he added.

Some investors may also be nervous about committing to large
projects ahead of a British general election in May, which is
expected to be unusually tight.

Wilson said he was not worried about the election outcome,
with both major parties, Conservative and Labour, keen to boost
the economy but hidebound by large deficits.

"They haven't got the money to make that much of a
difference."

But he did see political risk to investment in
infrastructure projects such as energy, for instance from
Labour's plans to put a cap on energy prices paid by consumers.

The biggest risk to investment in Britain could come from
personal and business taxes, deterring talented professionals
and corporations from staying in the country, Wilson added.

"We have created all these barriers to sensible commercial
solutions happening."
($1 = 0.6585 pounds)
(Editing by Elaine Hardcastle)